- Kenneth R. Feinberg, the Treasury Department’s special master on compensation, said he is reluctant to impose “clawbacks” to recoup pay from executives when their company’s financial performance falters. “I have an assumption in my mind that it’s not a great idea” to recover money “already paid and maybe already spent and already taxed,” Feinberg said today via video conference at a meeting of the Chicago Bar Association. “I’m wary of exercising that authority in too many cases.”

- General Motors Co. will close Saturn, the brand created 24 years ago to mirror Japanese companies’ carmaking, after Penske Automotive Group Inc. broke off discussions to buy the unit. Penske, operator of 310 auto retailers, backed out because of concern it wouldn’t have access to cars and sport-utility vehicles after 2011 when GM was due to stop supplying them, Penske said in a statement. “This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality,” GM Chief Executive Officer Fritz Henderson said in a statement on the company’s Web site. “I’m a little surprised that there was no plan B here,” said Stephen Spivey, an auto analyst with Frost & Sullivan in San Antonio. “It’s surprising to me that Penske had no idea that this might not be accepted.” Closing Saturn could create a public-relations problem for GM, as it deals with consumer concerns about the sudden death of one of its brands, said auto-retail analyst Paul Melville of Grant Thornton LLP in Southfield, Michigan. “You’ve got a lot of people driving around in Saturn cars wondering how am I going to get this serviced and what’s going to happen to my Saturn dealer?” Melville said.

- The U.S.Environmental Protection Agency proposed greenhouse gas regulations today for power plants, oil refineries and factories. The agency came up with the rules as Senate Democrats unveiled a “cap-and-trade” plan that would limit emissions through a system of pollution rights, or allowances, that companies could buy and sell. Republicans say the EPA is trying to pressure the Senate into passing a cap-and-trade bill after the House approved its own plan in June. Under the proposal released today, the EPA said it won’t target small sources despite the way the Clean Air Act is written because doing so would lead to “absurd results.” State-level environmental regulators who implement much of the Clean Air Act “would be paralyzed by permit applications in numbers that are orders of magnitude greater than their current administrative resources could accommodate,” the EPA said. For six years, the agency will use the higher threshold out of “administrative necessity” while it studies the workability of regulating industrial, or “stationary,” sources of greenhouse gas emissions through the Clean Air Act. Murkowski, who said EPA is using regulation of stationary sources as a “thinly veiled threat” to pressure lawmakers into supporting cap-and-trade legislation, said Republicans will keep trying to stop the regulation of industrial sources while letting the agency continue with plans to cut emissions from new cars and trucks. With today’s proposed regulations, the agency is “charging ahead, regardless of the ongoing debate in Congress and the economic consequences of their actions,” Robert Dillon, a spokesman for Murkowski, said in an e- mail. “She does not believe the EPA’s efforts to limit the Clean Air Act to an arbitrary 25,000 ton threshold will withstand legal challenge.” The proposed EPA regulation of large industrial sources is a “slippery slope” that may “discourage a lot of investment” in the U.S., said Bryan Brendle, energy and resources policy director for the National Association of Manufacturers, in a phone interview. The EPA may be taken to court by “any citizen group” that wants to use the Clean Air Act to stop the development of a project, such as a shopping mall, by arguing the project needs a greenhouse gas permit, Brendle said. While industry is “thankful” for EPA’s efforts to exempt small businesses from greenhouse gas regulation, today’s proposal is on “shaky legal ground,” William Kovacs, vice president of environment, technology and regulatory affairs at the U.S. Chamber of Commerce, said in an e-mailed statement.

- The People’s Republic of China celebrates its 60th anniversary today by staging a military paradeBeijing to demonstrate the country’s rising global influence. Hundreds of missiles and tanks and thousands of troops from the world’s largest standing army will parade past Tiananmen -- the Gate of Heavenly Peace -- where Mao Zedong on Oct. 1, 1949, declared the Communist Party’s victory in a civil war and took the reins of government. China now produces in a day the equivalent of a year’s output five decades ago, and is poised to surpass Japan as the world’s second-largest economy by 2010. The Communists, who lifted 300 million citizens from abject poverty and raised the country’s international influence, must now satisfy increasing demands for domestic freedom and accountability. The celebration “is a show-off to beef up confidence in, and support to, the regime,” said Huang Jing, visiting professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy. “Serious questions need to be asked how such a show of strength can translate into” tolerance, transparency and “inclusiveness in ethnic, cultural and religious diversity.” The country’s rise to global prominence gives credence to Napoleon Bonaparte’s prediction two centuries ago that “China is a sickly, sleeping giant. But when she awakes the world will tremble.” through the heart of

- The yen may weaken to around 100 against the dollar over the next “few months” given that there are few reasons for it to advance further, said Makoto Utsumi, a former top currency official at Japan’s Finance Ministry. “There aren’t really any particular reasons for the yen to strengthen,” Utsumi, 75, who led Japan’s currency policy from 1989 to 1991 as vice finance minister for international affairs, said in an interview in Tokyo Sept. 29. “I don’t expect the currency to extend its recent gains.”

Wall Street Journal:

- Investors have agreed so far to plow more than $1.13 billion into a long-awaited Treasury Department program to buy the toxic assets at the heart of the financial crisis. The Treasury announced that two of the nine investment firms tapped earlier this year to participate in the Public-Private Investment Program have raised at least $500 million -- a precursor to obtaining government financing.

- The Department of the Interior expects to approve seven major, renewable-energy transmission projects on western federal lands by the end of next year, part of the administration's effort to step up use of wind and solar power. Finding sites for new grid infrastructure has been a major obstacle to the Obama administration's plans to expand renewable-energy production. Many people and local governments oppose placing transmission projects, which help channel electricity generated by renewable-energy sources to consumers, in their backyards, citing environmental, safety and other concerns. The Interior Department is accelerating the construction of transmission projects on federal lands in an effort to streamline the permitting process, through there are still state, local and other federal regulatory hurdles that companies have to overcome.

- A new wave of financial alchemy is emerging on Wall Street as banks and insurers seek to make soured securities look better. Regulators are pushing back, saying the transactions don't have enough substance and stand to benefit bankers and ratings firms. The deals come as Wall Street firms, buoyed by surging markets, are seeking to profit from the unwinding of the complicated securities that helped fuel the credit crisis. Regulators, meanwhile, are struggling to prevent a recurrence of the crisis. The popular deals are known as "re-remic," which stands for resecuritization of real-estate mortgage investment conduits.

- Two Senate Democrats Wednesday unveiled climate legislation that aims to drastically cut greenhouse-gas emissions beginning in 2012, starting an effort that threatens to divide the party amid opposition from coal, manufacturing and oil interests. Senate Environment and Public Works Committee Chairman Barbara Boxer and Senate Foreign Relations Committee Chairman John Kerry outlined the measure, which would cut emissions from 2005 levels 20% by 2020 and more than 80% by 2050. Republicans took issue with the Boxer-Kerry bill, calling it a new national energy tax. "The last thing American families need right now is to be hit with a new energy tax every time they flip on a light switch, or fill up their car -- but that's exactly what this bill would do," Senate Minority Leader Mitch McConnell said in a statement. In the House, Speaker Nancy Pelosi called the legislation a "strong foundation" to work on, while Republican Leader John Boehner said the measure was a "dangerous proposal."

- Comcast(CMCSA), the nation’s leading provider of cable, entertainment and communications products and services, is in talks to buy the entertainment giant NBC-Universal from General Electric(GE), according to knowledgeable individuals. Deal points were hammered out at a meeting among bankers for both sides in New York on Tuesday, executives familiar with the meeting said. Two individuals informed about the meeting said that a deal had already been completed at a purchase price of $35 billion. A spokeswoman for NBC-Universal had no comment. A spokeswoman for Comcast also had no comment. The NBC-Universal division of GE, a premium content company, is a likely fit for the cable giant with its massive distribution pipeline. That is especially the case when the division's potential price tag has dropped significantly from a year ago.Comcast’s market cap is $48.44 billion. NBC-Universal has fallen in value to an estimated $35 billion in value, from about $55 billion a year ago.

NY Post:

- Sugar is the new crude oil for investment-hungry hedge funds, which are pushing sugar prices near 30-year highs and ushering new global shortages. After their infamous and massive bets on crude oil sent prices doubling and brought $5-a-gallon gasoline a year ago, hedge funds are now pouring their billions into raw sugar. Sugar prices have doubled since springtime, causing US officials to consider lifting tariff barriers so that more imported sugar can reach food and candy makers. Analysts say hedge funds are in search of high profits on commodity gambles, since returns on stocks and bonds are meager and less certain. In trading here yesterday, raw sugar surged as much as 4.4 percent to 25.15 cents a pound before settling at 25 cents, up 3.5 percent, the highest close since 1981. Betting by hedge funds and large speculators that sugar futures will jump has soared 77 percent this year, said the US Commodity Futures Trading Commission.

Politico:

- House Minority Leader John Boehner torched President Barack Obama Wednesday for his European trip to pitch the Chicago Olympics bid, criticizing the president for "going to go off to Copenhagen when we've got serious issues here at home that need to be debated." Obama's trip has been maligned by most Republicans as the health care overhaul remains in a continued state of flux in Congress and the top general in AfghanistanDenmark awaits word on a troop increase. The White House first said it was unlikely that Obama would go to because he thought it important to help push health care through Congress.

- U.S. officials signaled Wednesday that they would seek a rare one-on-one meeting with Iranian diplomatsIran and other major powers on Tehran's nuclear program. The talks, expected to last through the day, have been structured to allow both for group meetings and informal one-on-one discussions with Iran, which a senior administration official said would be "an opportunity to reinforce the main concerns we will be making in the meeting." He spoke on condition of anonymity because of the diplomatic sensitivity ahead of the talks. President Obama has sought to make engagement with the Islamic Republic and other antagonistic nations a central part of his foreign policy, but until now Iran has spurned his efforts.

during talks here on Thursday between

The Business Insider:

- Steve Jobs said people don't read any more. But Apple (AAPL) is in talks with several media companies rooted in print, negotiating content for a "new device." And they're not just going for e-books and mags. They're aiming to redefine print.

AP:

- Michael Vick is back with Nike(NKE) two years after the company severed ties over the quarterback's involvement in a dogfighting ring. "Mike has a long-standing, great relationship with Nike, and he looks forward to continuing that relationship," his agent, Joel Segal, said Wednesday. Segal would not reveal terms of the agreement. Nike declined a request for comment.

Reuters:

- Higher margins, the ability to collect and use information about customers, more revenue and greater willingness to share content with Internet operators is prompting Hollywood to join forces with the likes of Google's (GOOG) YouTube or set up its own Internet portals. Online video streaming and digital downloads should nearly triple to a $753 million North American market in 5 years, still a 5 percent sliver of DVD sales in 2008. But, analysts said, with disc sales dwindling and online viewing exploding, that gap will shrink.

- Unemployment rates rose in all cities across the United States in August from a year earlier, with 16 recording jobless rates of 15 percent or higher, according to the Labor Department. At the same time, only 11 metropolitan areas said they had gained jobs in August, while 356 had lost positions. For the eighth consecutive month, all 372 cities that the department surveys had year-on-year increases in jobless rates. The largest rise was in Detroit, where the rate rose by 7.9 percentage points, followed by its Michigan neighbor Muskegon, where it increased 7 percentage points. Detroit also has the highest unemployment rate in the country at 17 percent. But Los Angeles lost the most jobs in August from a year earlier, followed by Chicago and Detroit.

- A U.S.Senate panel on Wednesday adopted a measure aimed at rewarding healthy behavior in a sweeping healthcare overhaul sought by President Barack Obama as lawmakers pushed to complete the legislation. The Senate Finance Committee voted for an amendment offered by Republican Senator John Ensign and Democrat Thomas Carper that would allow health plans to provide financial incentives for people to quit smoking, exercise more and engage in other healthy activities. "I believe that the key to achieving savings is to provide rewards for people who engage in healthy behaviors," Ensign argued. The measure passed on a 18-4 vote despite concerns expressed by some Democrats as well as committee Chairman Max Baucus that it could raise insurance premiums for people who do not participate in wellness programs.

Financial Times:

- China has issued a stark warning about the risk from rising overcapacity in the economy, saying it could hamper recovery and lead to a surge in non-performing bank loans. The State Council, the country’s cabinet, issued a new plan to combat overcapacity in seven industries, barring new aluminum smelters for three years and criticizing “blind expansion” in parts of the steel and cement industries. The cabinet statement, which came late on Tuesday evening in Beijing, follows a crescendo of warnings from senior officials. It also outlined measures to restrict manufacturing of equipment for “green” industries of wind and solar power. over the past three months many government officials have begun to publicly warn that the credit binge could create overcapacity in heavy industry, which could produce a new round of bad bank loans. “Some regions act illegally, give approvals in violation of regulations or allow building before approval is granted,” the State Council said. The unusually blunt statement said that, without efforts to restrain production, it would be “hard to prevent vicious market competition and increase economic benefits, and this could result in factory closures, lay-offs and an increase in banks’ bad assets”.Prolonged overcapacity in industries such as steel and aluminum could also aggravate tense trade relationships with the US and Europe because of the risk that Chinese mills would dump inventories on to world markets at cheap prices. Government officials are also concerned that continued expansion of heavy industry such as aluminum and cement, which use a lot of power, will complicate efforts to meet energy efficiency targets ahead of the Copenhagen climate conference. The State Council said manufacturing capacity for wind power would be twice the actual installed generating output of 10m kilowatts by next year.

Telegraph:

- Carphone is understood to be close to agreeing terms with Vodafone over the sale of Apple's hugely popular device. At present Carphone has exclusive retailer rights to sell the iPhone through an agreement with Apple and O2, which until this week held the sole network rights to the iPhone. Charles Dunstone, chief executive of Carphone Warehouse, has credited the iPhone with enabling the company to increase its market presence at the expense of rival Phones4U.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and automaker shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Biotech longs and Defense longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is heavy. Investor anxiety is very high. Today’s overall market action is mildly bearish. Nikkei futures indicate a -43 open in Japan and DAX futures indicate a -2 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on investment manager performance anxiety, short-covering and bargain-hunting.

The positions and strategies discussed on BETWEEN THE HEDGES are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor of this blog holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in anyway, considered liable for the investment performance of any securities or strategies discussed.